Kindergarten to College (K2C). A First-in-the-Nation Initiative to Set All Kindergartners on the. Path to College. Leigh
New America Foundation Asset Building Program
Kindergarten to College (K2C) A First-in-the-Nation Initiative to Set All Kindergartners on the Path to College Leigh Phillips, San Francisco Office of Financial Empowerment Anne Stuhldreher, New America Foundation September 2011
In the Spring of 2011, the City of San Francisco automatically opened college savings accounts for over 1,000 San Francisco Kindergartners. The City also “seeded” every account with an initial deposit of $50. The account openings marked the official launch of San Francisco’s Kindergarten to College initiative, or “K2C.” This initiative, the first of its kind in the nation, aims to improve the odds for San Francisco Kindergartners and set all San Francisco public school children on a path to college, from the very first day of school. This case study provides an overview of Kindergarten to College (K2C), why city leaders started it, and how it works.
What Is Kindergarten To College?
secondary education. The hope is that as their savings grow,
The idea behind Kindergarten to College is relatively
so will their aspirations.
simple: to help families start saving earlier and to save more, by removing barriers to opening an account and
At full rollout, every child entering kindergarten in a San
providing incentives to spur contributions.
Francisco public school will have a college savings account automatically opened for them with a $50 deposit from the
Parents, friends, extended family and the students
City and County of San Francisco. Children enrolled in the
themselves will use their K2C account to save for post-
National School Lunch Program will receive an additional $50 deposit. K2C was piloted in the 2010-2011 academic
year with 1,200 students in 18 schools, representing 25
shocks; better health and education outcomes; and, the
percent of all kindergarten classes and will roll out to all
development of a “future orientation.”3
entering kindergartners—approximately 4,500 students per year—over the next two years.
New research shows that children with
Philanthropic and corporate foundations, community organizations, local businesses, and individuals have
savings accounts will be up to seven times
strengthened the appeal of the program by providing funds
more likely to attend college than those
for additional deposits and matching incentives to
without an account. This is true regardless of
encourage family savings and boost account balances.
the family’s income, race, or educational
Schools are integrating financial education—tied to the
attainment.
K2C account—into the K-12 math curriculum. We believe San Francisco will be the first city in the nation to integrate financial education that is linked to a real-life teaching tool in the form of the universal K2C account.
Why Did City Leaders Decide to Start K2C?
Too many San Francisco families have too little savings. San Francisco parents know they should be saving, but are not. One in three San Francisco children will be born into families with no savings or assets of any kind. This number
City leaders were compelled to create K2C when they
increases to one in two for Black and Latino children4. In a
learned that saving for college could make a critical
local survey, almost 100 percent of parents say they plan to
difference for San Francisco students. Six key findings
save for college, but only 50 percent are actually doing so5.
significantly impacted their decision:
Low-income families lack access to the savings products that build wealth. In San Francisco, 11 percent of families do
Savings—even small amounts—can improve the odds that San Francisco students will make it to college.
not have a checking account and more than 40 percent
New research shows that children with savings accounts those without an account.1 This is true regardless of the
College costs are skyrocketing and families will likely need to pay a bigger chunk of these costs than they have in the past.
family’s income, race, or educational attainment.
In 2009, the University of California Board of Regents
will be up to seven times more likely to attend college than
have a subprime credit score.6
approved a 32 percent increase in education fees. Even Emerging research also shows that savings has other
when factoring in grants and other waivers, the net cost of a
positive effects on children and their parents. Specifically,
year at a University of California or California State
2
University campus is one-third of the annual income for
savings is linked to increases in math scores among youth;
a greater sense of financial inclusion; greater financial literacy and fiscal prudence; protection against economic 1
Elliott, William and Sondra Beverly (2010). “The Role of Savings and Wealth in Reducing ‘Wilt’Between Expectations and College Attendance.” St. Louis: Center for Social Development. 2 Elliott III, William, Hyunzee Jung, and Terri Friedline (2010). Math Achievement and Children’s Savings: Implications for Child Development Accounts. Journal of Family and Economic Issues, 31, 171-184.
new america foundation
3
Scanlon, Edward and Deborah Adams. (2009). Do assets affect well-being? Perceptions of youth in a matched savings program. Journal of Social Service Research, 35, 33-46. 4 Asset Policy Initiative, Asset Poverty Index: Methodology, 2006 5 Data from a San Francisco Office of Financial Empowerment Survey of San Francisco parents, November 2009. 6 CFED: Building Economic Security in America’s Cities: New Municipal Strategies for Asset Building and Financial Empowerment, January 2011.
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and fees have outpaced increases in student financial aid,
The K2C account will give teachers a powerful tool to teach students about money
both on the federal and state levels. For example, the
The financial crisis was partly a crisis of financial
maximum federal Pell Grant currently covers 35 percent of
illiteracy—many adults are ill-prepared to navigate the
average tuition, fees, and room and board at public four-
increasingly complex financial services landscape. Many
year colleges and universities nationwide. In 1987-88, the
students, however, learn nothing about money or finance in
maximum Federal Pell Grant covered 50 percent of public
schools. The K2C account will give teachers a powerful real
low-income households.7 In addition, increases in tuition
higher education
costs.8
world tool to teach students about savings, financial institutions, compound interest, and budgeting. Studies
A college degree is the price of admission to compete in the 21st century economy. But too many San Francisco students are not making it to college.
have suggested that financial education—which will be
The average salary of someone with a bachelor’s degree or
aptitude tests when they have owned a bank account or filed
higher is nearly three times higher ($1,150 per week) than
a tax return. 13
provided in schools in the K2C program—is more effective when paired with accounts and investments. Some studies have indicated that individuals score higher on financial
the earnings of a high school dropout ($444). 9 California is 2025. This lack of knowledge workers will be a drag on the
K2C can attract investments from businesses and foundations for San Francisco families.
California economy, according to the Public Policy Institute
City leaders hope that K2C accounts will be “magnets” that
projected to have a severe shortage of college graduates by
of
California.10
attract deposits and donations from local businesses, foundations, and individuals. K2C will leverage private
Like many cities, San Francisco struggles with a high
funds for savings matches, create behavioral incentives, and
dropout rate. In the San Francisco Unified School District
help families earn money for college at significantly higher
(SFUSD), the dropout rate is 17.9 percent for students
rates than they can earn by saving on their own.
overall, but 35.9 percent for Blacks and 21.8 percent for Latinos.11 Dropping out of high school has high costs—for
Finally, San Francisco is a good environment to pilot K2C.
the
The
The City has fewer children than most cities, a progressive
unemployment rate for high school dropouts is three times
political environment, and a growing gap between rich and
students
themselves
and
for
society.
as high as it is for Californians with a bachelor’s
degree. 12
poor families that is a citywide concern.
Where Did the Idea for K2C Originate? The idea of establishing a universal system of children’s 7
Jones, Jessika (2011). College Costs and Family Income: The Affordability Issue at UC and CSU. Sacramento: California Postsecondary Education Commission. 8 Baum, Sandy, Kathleen Payea and Patricia Steele (2009) . Trends in Student Aid. Washington, DC: The College Board. 9 U.S. Bureau of Labor Statistics. “Usual Weekly Earnings of Eage and Salary Workers, First Quarter 2011.” April 19th, 2011 10 Johnson, Hans (2010). Higher Education in Califonia: New Goals for the Master Plan. Public Policy Institute of California. 11 Data from the California Department of Education, Educational Demographics Unit. 12 California Unemployment Rates by Educational Attainment, 2009 Less than a high school diploma: 15.7% High school graduates 11.0% Bachelor’s Degree or Higher 4.5%
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accounts at birth was first proposed by Professor Michael Sherraden in his seminal book, Assets and the Poor.14 He argued that these accounts could provide a foundation for lifelong asset accumulation as well as facilitate the delivery of basic financial education during the school years and jump-start the savings habit. 13
Johnson, Elizabeth and Margaret Sherraden (2006). From Financial Literacy to Financial Capability Among Youth. St. Louis: Washington University. 14 Sherraden, Michael (1991) . Assets and the Poor: A New American Welfare Policy.
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Policymakers in the U.S. and abroad have advanced Children Savings Account (CSA) proposals based on Sherraden’s ideas. A proposal known as the ASPIRE Act would give each child born in the U.S. a savings account The account would be seeded with at least $500, and would serve as a magnet for additional contributions to help the child achieve significant life goals, such as obtaining a postsecondary education. The ASPIRE Act has been introduced in four consecutive congresses and has traditionally drawn bipartisan support. In addition, over 10 states currently match the deposits of low-income families in their 529
expenses. The number comes from the section of the
In San Francisco, starting the accounts in kindergarten made more sense than starting them at birth.
Internal Revenue code that covers these types of accounts.
K2C was originally inspired by Children’s Savings Account
In addition, there are several countries—Singapore, the
proposals and policies in the United States and abroad,
United Kingdom, Uganda, Canada, South Korea, Nigeria
where accounts would be automatically opened for
and others—that either offer CSAs at birth or for youth, or
newborns. City officials concluded this approach made
college savings plans.15 A 529 Plan is an investment plan offered by a state to help families save for future college
have experimented with offering them.
16
more sense at a national level than a local one. In
What Was Learned During the Planning Process? The City’s Office of Financial Empowerment, located in the
particular, officials worried about financial as well as logistical constraints, particularly due to the sizeable number of children that leave the city before enrolling in school.
Office of the Treasurer, and the Department of Children Youth and their Families, led the planning process. They
Working with schools and starting in kindergarten,
hired
Development
however, made a lot of sense. The population of San
(CFED)—a national organization with deep expertise in
Francisco schools is racially diverse, and the schools serve a
Children’s Savings Accounts—to lead the research and
mostly low- to moderate-income population (55 percent of
design work that would form the basis of K2C. They formed
SFUSD students receive free and reduced lunch). In
a planning committee that included relevant city staff from
addition, parents and children receive information through
the Mayor’s Office, San Francisco Unified School District,
schools and the city can access critical data and information
the Office of Financial Empowerment (SF OFE) and the
to aid program administration. Schools also provide a
Department of
Key
platform for children’s financial education. By introducing
nonprofits—including the New America Foundation and
the accounts in the classroom, the city can help the schools
EARN—also participated.
reinforce a college-going culture for all students.
the
Corporation
for
Children
Enterprise
Youth and
Families.
Below is a list of key conclusions that came out of the twelve-month planning process:
15
Data collected from The College Savings Plans Network. Zimmerman, Jamie (2008). Child Savings Accounts: A Primer. Washington: New America Foundation. 16
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The K2C account requires unique features to make it work for the diverse San Francisco population.
college savings accounts affirms this aspiration with a
San Francisco’s school population includes a large
model also provides teachers with a classroom tool to teach
population of immigrants, ethnic minorities, and lower-
financial
income families. Many of these families are unfamiliar with
opportunity to consistently design lessons and curriculum
mainstream financial institutions and lack resources to save
to talk about savings and planning for college in the
for long-term goals. City leaders stressed the need for the
classroom would be lost. In addition, a universal model
K2C account to include features that would overcome
reduces administrative burden and cost.
demonstrated commitment from City leaders. A universal education.
Without
universal
access,
the
barriers faced by these populations. City leaders decided five features were essential:
The K2C accounts should be automatically opened. Other Children’s Savings Account initiatives require parents to voluntarily sign up, and, for a variety of reasons, have low take up rates, even when large incentives are
City leaders felt the seed deposit, set at $50, would send the right message to San Francisco families: “We’ll plant the initial seed, but it’s up to you to grow it.”
offered. For example, the State of Maine offers an initial deposit of $500 into all newborns’ 529 College Savings accounts, and has a 39 percent take-up rate amongst Maine
The City should seed every account with an initial deposit
parents.17
of public funds.
In addition, many parents, regardless of income,
fail to start saving early for college expenses due to inertia
City leaders felt the seed deposit, set at $50, would send the
and the sheer complexity of choosing an appropriate
right message to San Francisco families: “We’ll plant the
savings account. The City decided to automatically open
initial seed, but it’s up to you to grow it.” On a practical
accounts so all parents could participate. In San Francisco,
note, an initial deposit is required to open most accounts,
this meant opening accounts without social security
and this provided a straightforward way to open the
numbers (SFUSD does not collect this information from
accounts on day one. Finally, city leaders hope K2C will
students or parents) and without signed consent forms
help inform state and national Children’s Savings Account
from parents.
proposals, and an initial investment of public funds is an important feature of these policies.
The K2C program should be universal - all entering kindergartners and their families should receive the
K2C accounts should be progressively funded and provide
account regardless of income, documentation status or any
savings incentives and matches for parent and student
other determining factor.
savings, when possible.
The only requirement for participation is to be a
A primary goal of K2C is to level the financial playing field
kindergartner enrolled in a San Francisco public school. A
for San Francisco students. Larger initial deposits for lower-
universal approach provides equality of opportunity to all
income children would give a boost to families with less
children entering kindergarten in San Francisco public
ability to save. With this in mind, the City decided to offer
schools. College attendance is an aspiration for most
an additional $50 for children enrolled in the National
families and enrolling 100 percent of kindergartners in
School Lunch Program. Furthermore, providing savings matches (such as a dollar-for-dollar match up to a certain
17
Clancy, Margaret and Terry Lassar (2010). College Savings Plan Accounts at Birth: Maine’s Statewide Program. St. Louis: Washington University.
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sum) has been shown to increase savings for lower income families.
18
opening accounts without requiring parents to submit significant paperwork to meet various Know Your Customer requirements from the USA PATRIOT Act; and
A broad range of deposit options should be available to
the possibility of opening accounts for undocumented
parents and students.
students, who would not have social security numbers.
Research done by the Brookings Institution in 2005
Despite the initial lack of interest, city leaders were
estimated that one in five San Francisco households—and
determined to find an account structure with the array of
half of the City’s Black and Latino households—did not
features necessary to make K2C work for all families and
have bank accounts.19 City leaders believed that, in order to
began working directly with major financial institutions
be successful, K2C must help parents overcome barriers to
that
using mainstream financial services. They wanted to make
programs, such as Bank On San Francisco.
had
supported
other
financial
empowerment
it as easy as possible for parents and students to make deposits. A range of options was necessary to achieve this goal, including the ability to make deposits online, but also
City leaders believed that, in order to be successful, K2C must help parents overcome
in person at conveniently located outlets, and by mail.
No savings product currently on the market could meet the goals of the program. The City initially hoped it could partner with Scholarshare, California’s 529 College Savings Plan. 529 plans exist in all 50 states and families investing in them often receive tax or
barriers
to
using
mainstream
financial
services. They wanted to make it as easy as possible for parents and students to make deposits.
other benefits as a feature of participation. Discussions revealed an incompatibility between the intent of the K2C program’s financial partner to provide the account features
Securing the necessary public funding required cultivation of a wide-array of constituencies.
the City was looking for, such as automatically opening
In order to be funded, the K2C proposal needed approval
accounts without a taxpayer ID number or written parental
from the San Francisco Board of Supervisors. A number of
consent. In addition, Scholarshare’s current financial
high-profile public sector leaders championed the proposal
partner provides only limited options for in-person
before the Board of Supervisors, including: then Mayor
contributions—there is currently only one downtown
Gavin
location in San Francisco, which does not accept cash.
Superintendent
program and the willingness and ability of Scholarshare
Newsom,
Treasurer Carlos
José
Garcia,
Cisneros,
Board
of
Schools Education
President Hydra Mendoza, and Maria Su, head of the City leaders then issued a Request for Qualifications (RFQ)
Department of Children Youth, and their Families. Two
to identify financial institutions that were interested in
members of the Board of Supervisors—David Campos and
partnering with the City to administer the K2C accounts.
then Supervisor Bevan Dufty—advocated for K2C funding
No financial institution responded. In particular, financial
to be included in the 2010-2011 budget. They described K2C
institutions
large
as a small investment in the first year, of a few hundred
numbers of accounts with small balances; automatically
thousand dollars, that would yield big returns for San
seemed
uninterested
in:
opening
Francisco school children and the school district. They 18
Sherraden, Michael and Julia Stevens, et al (2010). Lessons from SEED: A National Demonstration of Child Development Accounts. 19 Fellowes, Matt and Mia Mabanta: San Francisco’s Unbanked Population, August 2005 (Unpublished Memo prepared for the City of San Francisco)
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emphasized that this small city investment would attract significant private dollars from philanthropic foundations,
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businesses, and other donors. They were also careful to find
find solutions to legal constraints (mostly related to Know
general fund dollars to support K2C, so that the initiative
Your Customer and tax reporting requirements), and move
would not take money away from other projects for schools
through the City’s contracting process.
and youth. Finally, they were careful to ensure that the initial schools that would pilot K2C were evenly spread
While K2C accounts are automatically opened for all
throughout the city, so they would be in every Supervisor’s
parents
district. Beyond the leadership of the public sector,
opportunity to opt out. To date, less than one percent of
community groups also played a key role in letting
families have done so. The school district provides students’
supervisors know that there was broad support for K2C.
names, dates of birth and addresses to the Office of
and
kindergartners,
parents
are
given
an
Financial Empowerment to open accounts for every student
Parents were very interested in the accounts, but had a lot of questions.
who has not opted out. However, parents must sign data
In designing K2C, city officials talked with dozens of
release additional information about students such as
parents, individually and in various focus groups and other
enrollment in the National School Lunch Program. These
meetings. Parents were supportive and appreciative of the
consent
account, but had a lot of questions. Some of the most
University and EARN, to assess the effectiveness of K2C. In
common questions were: “Why even bother saving for
the first year, approximately 60% of parents signed the
college when I know I’ll never be able to afford it anyway?”
voluntary consent forms.
release consent forms, in order for the school district to
forms
also
allow
researchers,
at
Stanford
“What happens to my money if my kid doesn’t make it to college?” “Will saving in the K2C account disqualify my child for financial aid?” “What happens to my money if we move?” In response to these questions, a “Frequently Asked Questions” page was developed and featured prominently on the K2C website.
How is the K2C Account Set Up and What are the Rules? Despite the lack of response to the official RFQ, several banks stepped forward informally to offer to work with the City to develop a savings product that would meet the goals of the program. The City of San Francisco chose to partner with Citibank. Citibank had demonstrated support at high levels of the organization for children’s savings accounts, experience working with Individual Development Accounts (IDAs), and was flexible in designing the account solution. For example, they invested significant resources in the
The City owns the accounts on behalf of the parents and
development of an online portal so students could view
uses an escrow-based platform. The City is holding a
their savings. They also allow a wide range of ways for
master omnibus account with the City’s tax ID number. All
parents and students to make deposits (at local branches,
families enrolled in the program then have sub-accounts
online, and by mail). The City worked with Citi for six
with their kindergartner as the designated beneficiary.
months to negotiate the structure and terms of the account,
Family contributions are made to the sub-account, which
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has a unique account number provided by Citibank on an
As the first program of its kind, program rules had to be
account card. Matches and incentives are tracked by ledger
created. The program used College Savings 529 account
and all deposits and matches can be viewed by families on
rules as a model, but faced additional challenges.
the online system. San Francisco officials selected this structure as the most workable one to automatically enroll
K2C accounts are “deposit only” accounts. No withdrawals
all kindergartners.
can be made from the K2C account unless they are qualified withdrawals, which include tuition for college,
The account structure has many advantages. It provides
community college, or other kinds of training programs.
parents who lack Social Security Numbers a safe place to
The account can also be used for books and other
save. Also, since the accounts are in the City’s name and
education-related expenses. All withdrawals must be made
not in the parent’s names, the savings will not affect their
prior to the student attaining the age of 25, although an
eligibility for public assistance programs, many of which
extension can be requested for those who serve in the
have limits on the amounts of savings parents can have
military or a similar national service program that may
before they lose eligibility. For example, CalWORKS
delay college attendance. If a student does not use the funds
(California’s name for its welfare program) has a $2,000
for post-secondary education, any family contributions are
savings limit that parents cannot exceed without losing
returned to the student. But the City deposits, philanthropic
benefits. Furthermore, by saving under the City’s tax ID
contributions, and growth amounts are forfeited. If a
number, the initial City deposit, the family savings and any
student leaves SFUSD they may still save in the account,
philanthropic contributions are protected from withdrawal
but will not receive matches and other incentives. All
and may only be used for post-secondary education. The
program rules are listed on the K2C website.
account is easy to use and families can make deposits by mail, online and by auto-deposit, or at any Citibank branch.
What Incentives Are Provided to Help Families Save?
There are disadvantages too. In order to avoid tax issues,
City leaders and program partners considered a variety of
the account does not earn interest. Instead sub-accounts are
incentives, and decided on the following structure for the
awarded a “growth amount”, similar to interest, but a
two-year pilot:
student will only receive the growth match if they use the funds for post-secondary education. The growth match is
An initial $50 deposit by the City into every account.
similar to money market rates, which can be very low. The
As mentioned previously, this gives all families a head start
City is implementing a plan to improve the growth
and facilitates the opening of the account.
potential of accounts by providing additional incentives in up to $2,500 a year, a cap designed to prevent the accounts
An additional $50 deposit by the City for students enrolled in the National Student Lunch Program.
being used as a tax shelter. Once deposits are made, they
These deposits give a boost to lower income families, an
cannot be withdrawn until they are used for post-secondary
important goal of K2C. Furthermore, this incentive helps
education–this includes family contributions. While this
the school district achieve a key goal of increasing
protects savings, it will also require gaining significant trust
participation in this program, since every eligible student
from families to believe that the City’s K2C account is a
that signs up for the National School Lunch Program
safe, reliable and competitive vehicle for their money.
brings additional federal dollars to schools.
the form of savings matches. Parents are allowed to deposit
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A dollar for dollar match for every dollar deposited up to $100.
also want to assess the effectiveness of K2C’s marketing
This incentive is funded by private philanthropy. EARN, a
message and incentives have been understood by San
non-profit focused on asset building for low-income
Francisco families—and have motivated them to take the
families, agreed to raise these matching funds in the first
next step by participating and saving. As the City
year and other donors, such as the San Francisco
undertakes these evaluations, it can also determine whether
Foundation are raising money for future year matches.
K2C has begun to transform the financial capabilities of
and outreach efforts. We hope to determine that the
parents and the college aspirations of their students.
A $100 incentive for any parent that signs up to make automatic deposits into the account each month or makes monthly contributions for six months in a row. One of K2C’s key priorities is to encourage parents to establish a regular savings habit through automatic regular deposits. As this option may not be available to all families, the “Save Steady” bonus also rewards families for consistent saving. Private funds have been raised to support this incentive for years one and two. In the future, the City may deliver additional incentives
The City, EARN, and Stanford University will conduct a
through the accounts to help students achieve key goals.
broad and integrated research effort to answer these
Incentives will be linked to savings activity or educational
questions. Using an independent survey research firm, the
goals,
Financial
City and EARN will assess parents’ experiences with regard
Empowerment or the SFUSD. For example, the City is
to materials, messaging and branding, and attitudes and
considering providing a monthly or weekly incentive to
experiences about saving and college expectations. EARN,
boost attendance. Strong attendance during the initial years
with its extensive background in engaging with San
of school is a powerful predictor of how likely students are
Francisco families about savings, will conduct focus groups
to make it to college. The school struggles with some
with parents to expand on the quantitative findings and
children who are chronically absent. Emerging research
conduct one-on-one interviews with students about their
shows small incentives, $5 a week or month, for example,
future goals. The City, EARN, and Stanford University will
may boost attendance.
work to identify trends in account data, by tracking deposits
and
verifiable
by
the
Office
of
How Will K2C be Evaluated?
and other activities. Additionally, Stanford University plans to conduct interviews with teachers about the impact of the
Evaluating the outcomes and successes of the Kindergarten
K2C program and measure whether the $50 incentive for
to College program will be essential. The City needs to
free and reduced lunch students improved take-up. All of
confirm via independent research and analysis that the
these efforts will be conducted using the languages most
program design reaches children and families from a wide
spoken in San Francisco (English, Spanish, and Chinese).
range of backgrounds and is effective at encouraging what extent the initial spark provided by the City’s
Who are the Key Partners in K2C and What Roles do They Play?
contribution results in continued saving by families, and
Many people over many months worked on the design and
whether the design of the savings account works well. We
rollout of the K2C initiative. The effort included input from
savings. We hope to learn from these findings how and to
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political, financial, and non-profit leaders, as well as
What are the Future Plans for K2C?
members of the school district itself.
The City and its partners aim to expand K2C to more students and build on it in ways that enhance its mission.
City Officials A variety of City officials play a role in K2C. The City’s
Achieve full rollout.
Office of Financial Empowerment, in the City Treasurer’s
Over the first two years, K2C will increase enrollment and
Office, led the start up and design of K2C and runs the
by 2012, K2C accounts will be provided for every
program on a daily basis. The Department of Children
kindergartner on the first day of school.
Youth and Families is a key advisor to the K2C and funds K2C. The Mayor and City Treasurer and other city leaders
Provide additional savings incentives.
used their “bully pulpit” to raise public awareness of K2C
The City plans to continue efforts to raise private funds. If
and to influence key stakeholders.
successful, the City would consider providing additional incentives to help families build savings.
San Francisco Unified School District The School District provides student data, informs parents
Expand savings options.
about the accounts, collects consent forms, and fields
The City is considering looking at expanded options for
questions. School secretaries, principals, teachers, parent
savings vehicles for every family that reaches $2,500 in
liaisons, and after school programs are involved in these
savings. For example, once a family reaches this benchmark
activities. Teachers teach financial education tied to the
they may no longer be eligible for matches but their
accounts by integrating it into the math curriculum. The
accounts could be transferred into an appropriate interest
School District also designed the curriculum, with
bearing account into which the family can continue to save.
assistance from CFED. Teachers share best practices and results through professional development workshops and
Implement the research and evaluation plan.
peer learning circles.
Over the next two years, the City and their research partners at EARN and Stanford University, will implement the
Citibank
program evaluation and begin analyzing and publicizing
Citibank holds the K2C Master Account that is in the City’s
the early results.
name and the subaccounts that are in students’ names. families to track their savings. They assist in the production
What Are the Key Challenges as K2C Moves Forward?
of program materials such as the account cards, and funded
Maximizing the impact of K2C will depend on identifying
the production of materials in the first two years.
and overcoming a few key challenges going forward. These
They created and maintain the online portal to allow
include engaging students and families as well as partner
Nonprofit partners
institutions (including political, financial, and non-profit),
CFED coordinated the planning process. EARN is providing
as well as administering the K2C accounts themselves.
matching funds in the first year and helping to evaluate
Significant challenges include:
K2C. The New America Foundation brought the initial Many community organizations are also getting the word
Keeping parents and students motivated and saving in the accounts.
out about K2C to their clients and networks.
The K2C team is implementing a marketing and outreach
concept to the City and plays an ongoing advisory role.
campaign whose goal is to encourage parents, students, and
new america foundation
page 10
others to make regular deposits. Grand, a San Francisco
the demand for philanthropic savings matches grows as the
creative agency, developed key messages and materials for
program expands. The City has formed a fundraising
the campaign, many of which appear throughout this case
committee for K2C and is exploring starting an endowment
study. K2C will reach parents through working closely with
to support the effort. So far, enthusiasm from funders is
school staff—teachers, parent liaisons, and secretaries who
high and matched funds are secured for the first two years.
staff school front offices. These staff will inform parents PTA meetings, after school programs, and classroom
A general willingness to retool approaches if they are not working.
events. Monthly mailings, electronic newsletters, volunteer
An initiative like K2C has never been attempted. It will
phone banking, and other reminders will be implemented
likely stumble at times. All of the partners will need to see
and focus group feedback will continue to refine marketing
mistakes as learning opportunities to retool and strengthen
messages.
approaches. In order to strengthen the feedback loop
and students about K2C through school events, such as
between parents and the K2C program, focus groups on the
Maintaining the momentum and commitment of all partner institutions.
product design and outreach strategy were conducted in
K2C will require the ongoing close collaboration of the
coordinated a “phone bank” to contact every enrolled
school district, City Hall, Citibank, and nonprofit partners.
student’s family. A “Teacher on Special Assignment”
To achieve this goal, the Office of Financial Empowerment
position has also been created at the school district to serve
formed a steering committee to bring the institutional
as a liaison between the K2C program and the participating
partners together every month to inform K2C on an
schools.
ongoing
basis.
Non-profit
partner
EARN
is
also
September 2011 and the United Way of the Bay Area
savers and K2C parents who can speak about the benefits of
What are the Key Recommendations for Other Cities?
matched savings programs.
Designing and implementing K2C required substantial
spearheading an advocacy effort involving EARN IDA
planning over many months between city officials, financial
Administering the accounts.
institutions, schools, students, and parents. The following
The K2C account structure is not an off-the-shelf product
is a set of recommendations to other cities with the desire
and has been designed to program specifications. The City
to undertake similar efforts.
has never administered a similar account program and is anticipating that challenges will arise in the day-to-day
Do your research.
management and tracking of the accounts. The City is
First, be clear about what problems you aim to solve. Then
mitigating these issues through the use of technology and
assess the suitability of Children’s Savings Account as a
the engagement of banking and investment staff from the
solution. A number of organizations have done research on
Treasurer’s Office.
Children’s Savings Accounts, conducted demonstration programs, and advance policies at the state and national
Maintaining funding for the accounts and matches for deposits.
level. The following organizations were instrumental in the
Like many cities, San Francisco faces occasional budget
efforts: CFED, EARN, the Asset Building Program of the
shortfalls. In addition, the number of students enrolled in
New
K2C increases exponentially as the program rolls out—1,100
Development (CSD) at Washington University at St Louis,
in year one, 3,500 in year two and 8,000 in year three—so
and the San Francisco Office of Financial Empowerment.
new america foundation
development of K2C and may be able to benefit similar America
Foundation,
the
Center
for
Social
page 11
Descriptions and their contact information are included at
any other individual. Reach out to other city and
the end of this report.
community leaders who work on children’s issues.
Allow for a planning process that engages key stakeholders.
Parents and students are the consumers of
We estimate that similar efforts to K2C could take 12 to 18
K2C. In order for the program to be
months to plan. Leadership from the school district, city government, community groups and parent representatives
successful it is critical to solicit their ideas
are all critical to developing a successful program.
about the program.
Choose an appropriate program design for your project.
Involve parents from the beginning.
San Francisco chose to pilot a universal, auto-enroll model
Parents ands students are the consumers of K2C. In order
for K2C. This program design was ambitious and caused
for the program to be successful it is critical to solicit their
challenges in data exchange, tax reporting, “know your
ideas about the program. For example, San Francisco
customer” requirements and other legal hurdles. It
conducted focus groups to understand the needs of parents,
required legal and financial expertise to resolve these
their preferences, and how to reach them. These efforts
issues. It is unclear if a program of this type can only be
included an informal survey of 200 parents, focus groups
executed by a government entity. However, other versions
in English, Spanish, and Cantonese, and meetings with
of children’s savings account programs exist, most of which
parent groups.
require voluntary signed consent from a parent to facilitate reach 100 percent take-up rates they can be easier to
Be ready to invest significant effort in the development of the savings account product.
administer and may allow for a broader range of account
The City and its partners didn’t seek to spend significant
options for families.
time designing a new account product. Unfortunately for
the opening of the accounts. While these programs will not
San Francisco, no account structure existed that would
Build champions in your local political leadership and reach out to key players.
work for the intent of the program and the diversity of San
Key stakeholders among public officials include Mayors,
values of a program, and see if there is an off the shelf
Treasurers, City Council Members, or Members of the
product available. As a first step, we would recommend
Board of Supervisors. Without the support of these officers
approaching a state’s 529 College Savings plan as a
and other local politicians it would be difficult to create a
potential
program like K2C. In addition to directing the levers of
adjustments to meet local needs these existing structures
government, they can help bring on other partners, give
may serve as an excellent host for accounts. This is
credibility to a new program, and attract media attention.
especially true for program designs that do not pursue an
Strong institutional and political support will be necessary
auto-enroll model.
Francisco families. It is important to assess the needs and
administrator
of
such
a
program.
With
to get such an effort off the ground and keep it moving. Educational leaders are a critical stakeholder as well—
The City’s negotiations with Citi lasted seven months and
administrators, principals, and teachers will have as much
involved challenging contract negotiations. Luckily, the San
impact on the day to day implementation of the program as
Francisco Treasurer’s Office, where the city’s Office of Financial Empowerment is housed, had deep expertise in
new america foundation
page 12
financial management and investments, the technological
County and the SFUSD. Program leaders originally
systems to develop a product of this kind, and attorneys
believed that as city and county agencies, the flow of data
with expertise in this area. Staff also had experience
and information between the school district and the
managing
Treasurer’s Office would be simple. However, the school
Individual
Development
Account
(IDA)
programs, which provide matched savings accounts and
district
financial education to low income people. Citibank proved
confidentiality rules that prevented the sharing of key
to be a willing and supportive partner, and dedicated
pieces of information, like student identification numbers,
significant resources. Outside attorneys provided pro bono
and enrollment in free and reduced price lunch without
advice and recommendations. However, the creation of this
parent permission. This increased the complexity of the
product and the administrative tools required to maintain
savings product design as it meant accounts had to be
this
of
opened with only three pieces of information—student
implementation and planning (on top of the original 12
name, address, and date of birth. The creation of the
month design phase).
consent form mitigated many of these issues. In year one of
program
on
the
back-end
took
months
is
bound
by
stringent
federal
and
state
the program, 60 percent of parents signed the consent
Identify the correct people at the school district and build buy in and ongoing commitment at multiple levels.
form and the City plans to improve on this number as the
Working within a public school system, even with full
and back to school nights.
commitment
from
SFUSD,
presented
program rolls out by further incorporating the consent form process into other school activities, like registration
unexpected
beyond the school administrators—such as principals,
Getting financial education into classrooms takes resources and follow through.
secretaries, parent liaisons, and the teachers themselves—
This does not happen by simply handing a curriculum
play a pivotal role in K2C and must be consistently
guide to someone in the schools district’s central offices.
engaged. For example, we observe that the number one
CFED worked with SFUSD to develop the kindergarten
factor to generate high-levels of parent engagement in the
curriculum for K2C. However, it was the dedication of the
program is enthusiasm from school secretaries and
elementary math curriculum director that got the materials
principals. The consent form return rate in schools with
embedded into lesson plans and teachers trained on how
engaged school site staff is as high as 90 percent, whereas
best to teach the materials. That position has since been
in schools with less engaged staff the percentages can be as
eliminated due to budget cuts and the K2C program has
low as 10 percent. To increase buy-in at each school site,
raised funds to create a half-time position of a “teacher on
K2C hosts regular trainings for secretaries, principals, and
special assignment” to ensure that K2C financial education
teachers. Program staff conduct school site visits to discuss
continues to be developed for future grade levels and
challenges and opportunities. As the program grows,
incorporated into lesson plans. K2C will also provide
keeping school site staff engaged will prove increasingly
funding for teacher professional development and learning
important to the success of the program.
communities to ensure teachers are sharing best practices
challenges and required creative solutions. Key players well
and talking about the program in the classroom.
Anticipate legal questions about the sharing of parent and student data.
Look for public and private funding sources.
The K2C program also faced unanticipated legal and data
The K2C planning process was supported with $120,000 in
exchange problems with the school district that necessitated
city funding. For the first year budget, the City will spend
the creation of legal agreements between the City and
$350,000. The City also receives private support for
new america foundation
page 13
marketing and outreach, evaluation, financial education and matching dollars and savings incentives. Despite this significant private support the K2C program is operating on a very lean budget and has only one full time employee,
Select Media Coverage of K2C
Francisco Chronicle
although the city hopes to increase staffing through private support. The costs of K2C will grow each year as more and more parents open accounts and begin drawing down matching funds. We are exploring creating an endowment to permanently support K2C.
Conclusion While we won’t know the impact of K2C on college
City helps families save for college—CNN
New Programs Aim to Close the Wealth Gap— NPR
September of 2011, city officials attended dozens of back to school nights across San Francisco to share the details of K2C accounts directly with families. Parents asked
SF Creates City Funded Account for School Children— ABC News
attendance and completion for many years, the K2C program is already proving popular with parents. In
SF first U.S. city to start college savings plan—San
US Secretary of Education Announces Partnership between Department of Education, FDIC and NCUA
questions like “Is an account available for my other children?” “Are the incentives still available for my firstgrader?” “Are there additional investment options if I start saving?” and “How much can I contribute and how much match money can I receive?” What’s clear from these sessions is that parents appreciated the boost to help them start saving regularly for their children’s college education. If college tuitions continue to rise, families across the nation will need to save more than ever. City leaders hope families will live up to the K2C program tagline: Save Steady; Dream Huge.
new america foundation
page 14
Appendix: Resources and Key Contacts
help Californians build savings. More information is available online at www.assets.newamerica.net.
The Official K2C Website: www.k2csf.org The Corporation for Enterprise Development (CFED)
City of San Francisco Office of Financial Empowerment
CFED, which coordinated the SEED Initiative, is a national
The San Francisco Office of Financial Empowerment is
nonprofit that works to expand economic opportunities for
housed within the Office of the Treasurer and Tax Collector
low-income families. The SEED Initiative is the first
and operates the Kindergarten to College program, as well
nationwide demonstration of Children’s Savings Accounts,
as the City’s other groundbreaking financial empowerment
documenting the effects of savings upon aspirations and
initiatives, including Bank On San Francisco. The OFE
outcomes as children grow. More information is available
serves as a convener and influencer to further financial
online at www.seed.cfed.org.
empowerment
goals,
connecting
low-income
San
culturally relevant financial education to ensure success in
Center for Social Development at Washington University in St. Louis (CSD)
the mainstream. More information is available online at
Housed at the George Warren Brown School of Social
www.sfofe.org and www.k2csf.org.
Work, CSD creates and studies innovations in public policy
Franciscans to healthy financial products and providing
that enable individuals, families, and communities to
EARN
formulate and achieve life goals, and contribute to the
EARN is a nonprofit dedicated to helping low wage workers
economy and society. Through innovation, research, and
break the cycle of poverty and create new cycles of
policy development, CSD makes intellectual and applied
prosperity by integrating direct service, applied research,
contributions in social development theory, evidence,
and organizing key stakeholders to drive policy change that
community
bring best practices to scale. More information is available
emphasizes its role as a teaching institution, training
online at www.earn.org.
doctoral and master’s students through applied research projects.
projects,
More
and
information
public
is
policy. CSD
available
online
also
at
The New America Foundation's Asset Building Program
http://csd.wustl.edu/Pages/default.aspx.
As part of the Foundation’s work bringing new thinkers
About the Authors
and new ideas to the fore of public discourse in America,
Leigh Phillips is the manager of San Francisco’s Office of
the Asset Building Program develops policies and tools that
Financial Empowerment and led the startup of K2C. Anne
help low income people build wealth. The program’s
Stuhldreher is a Senior Policy Fellow at the New America
research has explored the potential of Children’s Savings
Foundation and helped develop the K2C concept and start
Accounts nationally and internationally The Asset Building
the program.
program also advances statewide policies in Sacramento to
new america foundation
page 15
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